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A review by wilte
Misbehaving: The Making of Behavioral Economics by Richard H. Thaler
5.0
Excellent book on the rise of behavioral economics from one of the scientists at the forefront. Great mix of discoveries, going against the conventional wisdom in economics that all people choose rationally & optimal. Thaler describes his search for Supposedly Irrelevant Factors (SIFs)/anomalies that should not matter to Econs, but heavily impact Humans. He does this in a with funny asides and anecdotes., and a healthy dose of self-mockery.
Even though I am familiar with almost all of the results and science he describes, this was a rewarding read and a great addition to the growing pile of BE/Nudge books. Definitely not a me-too book in that genre.
Quotes:
p53 "To this day, the phrase “survey evidence” is rarely heard in economics circles without the necessary adjective “mere,” which rhymes with “sneer.” This disdain is simply unscientific."
p99 "The technical term for discounting of this general form that starts out high and then declines is quasi-hyperbolic discounting. If you don’t know what “hyperbolic” means, that shows good judgment on your part in what words to incorporate in your vocabulary."
p105 "If someone even more brilliant than Barro comes along and thinks of an even smarter way for people to behave, should that too become our latest model of how real people behave?"
p112 "At some point in pondering these questions, I came across a quote from social scientist Donald McIntosh that profoundly influenced my thinking: “The idea of self-control is paradoxical unless it is assumed that the psyche contains more than one energy system, and that these energy systems have some degree of independence from each other.” The passage is from an obscure book, The Foundations of Human Society."
p216 "One reason is that it is risky to be a contrarian. “Worldly wisdom teaches that is it is better for reputation to fail conventionally than to succeed unconventionally.” [Keynes]"
p263 "“the three bounds”: bounded rationality, bounded willpower, and bounded self-interest."
p281 "If there is a number, people will use it."
p329 [on the book Nudge] "Overall, I think it would be fair to say that the level of enthusiasm in the publishing community for our book varied between tepid and ice-cold."
p342 "1. If you want to encourage someone to do something, make it easy. (...) 2. We can’t do evidence-based policy without evidence."
p354 "As Gene Fama often says when he is asked about our competing views: we agree about the facts, we just disagree about the interpretation."
p363 "Good leaders must create environments in which employees feel that making evidence-based decisions will always be rewarded, no matter what outcome occurs. The ideal organizational environment encourages everyone to observe, collect data, and speak up."
Even though I am familiar with almost all of the results and science he describes, this was a rewarding read and a great addition to the growing pile of BE/Nudge books. Definitely not a me-too book in that genre.
Quotes:
p53 "To this day, the phrase “survey evidence” is rarely heard in economics circles without the necessary adjective “mere,” which rhymes with “sneer.” This disdain is simply unscientific."
p99 "The technical term for discounting of this general form that starts out high and then declines is quasi-hyperbolic discounting. If you don’t know what “hyperbolic” means, that shows good judgment on your part in what words to incorporate in your vocabulary."
p105 "If someone even more brilliant than Barro comes along and thinks of an even smarter way for people to behave, should that too become our latest model of how real people behave?"
p112 "At some point in pondering these questions, I came across a quote from social scientist Donald McIntosh that profoundly influenced my thinking: “The idea of self-control is paradoxical unless it is assumed that the psyche contains more than one energy system, and that these energy systems have some degree of independence from each other.” The passage is from an obscure book, The Foundations of Human Society."
p216 "One reason is that it is risky to be a contrarian. “Worldly wisdom teaches that is it is better for reputation to fail conventionally than to succeed unconventionally.” [Keynes]"
p263 "“the three bounds”: bounded rationality, bounded willpower, and bounded self-interest."
p281 "If there is a number, people will use it."
p329 [on the book Nudge] "Overall, I think it would be fair to say that the level of enthusiasm in the publishing community for our book varied between tepid and ice-cold."
p342 "1. If you want to encourage someone to do something, make it easy. (...) 2. We can’t do evidence-based policy without evidence."
p354 "As Gene Fama often says when he is asked about our competing views: we agree about the facts, we just disagree about the interpretation."
p363 "Good leaders must create environments in which employees feel that making evidence-based decisions will always be rewarded, no matter what outcome occurs. The ideal organizational environment encourages everyone to observe, collect data, and speak up."